Aurelia Butler

(Reuters) -Millions of Florida residents secured boats and properties and fled to higher ground on Wednesday as Idalia intensified to an “extremely dangerous” Category 4 hurricane and threatened a direct hit on the state’s Big Bend region.Evacuations were ordered in 28 of Florida’s 67 counties as of late Tuesday. Most of the state and parts of Georgia and South Carolina are under storm warnings or advisories.Here are the most important things to know about Idalia’s projected impact.WHAT IS HURRICANE IDALIA’S PATH?Idalia grew from a tropical storm into a Category 4 hurricane on its way to landfall in Florida early on Wednesday, after causing floods in western Cuba that forced residents of coastal towns to seek higher ground.As of 5 a.m. EDT (0900 GMT) on Wednesday, Idalia was packing maximum sustained winds of 130 miles per hour (215 kph) as it churned toward shore 60 miles (95 km) west of Cedar Key, Florida. Three major hurricanes have struck Florida in the past seven years: Irma in 2017, Michael in 2018 and Ian last September.Idalia’s center will likely cross Florida’s coastline somewhere in the Big Bend region, where the state’s northern panhandle meets the Gulf side of the Florida peninsula, the NHC projected.WHAT ARE ‘STORM SURGES’ and ‘KING TIDES’?The deadliest threat Idalia poses is a surging wall of seawater 10 to 15 feet (3.0 to 4.6 m) high that could flood low-lying areas along Florida’s coast, according to authorities.”Storm surges” occur when high winds and atmospheric pressure from an oncoming hurricane force ocean water onto land. The resulting floodwaters may take a couple of days to subside.A “king tide” – the highest type of high tide, caused by the extra gravitational pull that occurs when the sun and moon align with Earth – is also expected on Wednesday, which will likely exacerbate the surges from Idalia.Hundreds of miles of Florida shoreline are under storm surge warnings as Idalia approaches, from Apalachicola Bay in the panhandle through Tampa, the state’s third-largest city, and down to Sarasota in the south.EVACUATION ZONESAuthorities are scrambling to move thousands of Florida residents out of danger before nightfall.The Florida emergency management agency listed 28 counties with evacuation orders.Sixteen counties issued mandatory evacuation orders for certain residents, especially those living in coastal and flood-prone areas or in mobile homes, recreational vehicles or structurally unsound housing.Local authorities opened dozens of shelters for evacuees. They urged residents to take the evacuation orders seriously. “Please do not become complacent – take action now if you have not done so already,” wrote the sheriff’s office of Citrus County, north of Tampa, in a Facebook (NASDAQ:META) post.WHAT DISRUPTION COULD BE CAUSED?Even Floridians not under evacuation orders should expect disruptions as a result of Idalia, from power outages to shuttered schools and businesses.Florida Governor Ron DeSantis has declared a state of emergency for 46 Florida counties. About 5,500 National Guard members were mobilized, while 30,000 to 40,000 electricity workers were on standby to help restore power quickly after the hurricane passes.School districts around the region canceled classes starting on Monday afternoon. Tampa International Airport closed commercial operations and did not expect to resume until Thursday. More

NEW YORK (Reuters) – If you have reached age 65 and are reading this, you are likely going to live a lot longer than you realize.The bad news is that you obviously will require money to do so – and you might have to revise your retirement calculations upward.That is the finding of a new report from TIAA Institute and the Global Financial Literacy Excellence Center, which has discovered that our collective “longevity literacy” – our grasp of how long we are going to be around – is very bad indeed.“Only a third of Americans have an understanding of how long people live in retirement: 31% underestimate life expectancy, and 35% just said, ‘I don’t know,’” says Surya Kolluri, head of the TIAA Institute. Indeed, if you get to 65, you are no longer looking at population-wide longevity averages, which are currently around 76.1 years, according to the Centers for Disease Control and Prevention.That is because you have already outlasted scores of people who did not make it that far. Over time, the averages shift: Men who make it to 65 can expect to live to 84, while women are looking at an even longer runway to 87.And those are just averages, by the way. Which means that many people can expect to live even longer than that: For those who reach age 65, 30% of men and 40% of women will live to 90 and beyond.Looking at it another way, for those who make it to 65, the odds of not getting to 70 are very low: between 5-10% for men, and less than 5% of women.“Longevity risk is real,” says David Demming of Demming Financial Services in Aurora, Ohio. In one recent week alone, Demming, who is a financial planner, hosted meetings with a sprightly group of clients aged 95, 97, and 100.“The 95-year-old and 100-year-old have large surpluses because of good advice,” Demming says. “But the 97-year-old will run out of money this year. We have warned her children and grandchildren.”It is hard to blame people for not planning all the way to triple digits because that is a very tall order. But since it is a possibility, and you want to err on the conservative side, your retirement playbook may need some revisions.Here are some ways of how you can rethink and recalculate a longer lifespan:HOLD STOCKS WELL INTO RETIREMENTThe old notion of retirement allocation was that by the time you reach your golden years, you should be largely or entirely invested in ‘safer’ asset classes like bonds or cash.But if you are 65 and still looking at another 20 or even 30 years ahead, that allocation will not get you where you need to go. You should consider holding a portion of higher-risk, higher-return assets like equities well into your retirement years. Even if stocks slump, which they can certainly do, with a runway of decades you will have time to earn losses back.CONSIDER GUARANTEED INCOME PRODUCTSThe ‘risk’ in longevity risk is that you will outlive your cash. With an annuity product, that risk goes away – you can keep cashing monthly checks until you pass away.Just be wary of fees and commissions, for which this finance niche is notorious. And know that by investing an initial lump sum in an annuity, you take on the risk that you could die the next day and not benefit from those years of checks. But – not to put too fine a point on it – you will not be around to regret that decision.DELAY SOCIAL SECURITYWith longer projected lifespans, the issue of when to start taking Social Security takes on added importance. If you apply as soon as you can, at 62, you will get permanently reduced benefits.If you wait all the way until 70, your monthly check will be much bigger for the rest of your life. Over 15 or 20 years, that difference becomes very significant indeed. To grasp how much, use the Social Security Administration’s calculators here: (https://www.ssa.gov/oact/quickcalc/early_late.html).“If people think about this in three layers, that would be valuable,” says TIAA Institute’s Kolluri. “The first layer is Social Security. The second layer is some sort of lifetime income. And with the third layer, let the market work for you to take care of longevity risk.” More

Relevant financial departments are formulating policy documents with this goal in mind, the newspaper quoted Ma Jianyang, deputy head of the financial market department at the People’s Bank of China (PBOC) as saying.The central bank will ask financial institutions to set annual targets for services to private firms and vigorously expand loans to companies that are borrowing for the first time, it said.China’s new bank loans tumbled in July and other key credit gauges also weakened, even after policymakers cut interest rates and promised to roll out more support for a faltering economy.Analysts have cut their growth forecasts for the year to below the government’s target of about 5%, as they also factor in a worsening of the crisis in the property sector and weak consumer spending. Investment by private companies shrank 0.5% in the first seven months of the year, bigger than the 0.2% decline for the first half.The Shanghai and Shenzhen bourses, major banks including the Industrial and Commercial Bank of China and China Construction Bank (OTC:CICHF) as well as at least 11 private firms participated the meeting, according to Yicai financial news. The firms included energy equipment manufacturer Titan Wind Energy, egg producer DQY Ecological and property firms Longfor Group and Seazen Holdings, Yicai said. In other recent policy plans, some state-owned banks will soon lower interest rates on existing mortgages, the first such move in China since the global financial crisis, people familiar with the matter have said. More

(Reuters) – The Biden administration will provide $95 million through the Bipartisan Infrastructure Law to improve Hawaii’s electric grid, the White House said on Wednesday.The island of Maui was devastated earlier this month after the deadliest U.S. wildfire in more than a century swept through the resort town of Lahaina, leaving 115 people dead and 338 missing. More

1. Futures edge lower ahead of fresh economic dataU.S. stock futures inched down on Wednesday, but stayed relatively close to the flatline, as investors digested weaker-than-anticipated job openings data and looked ahead to further labor market figures later in the week.At 05:14 ET (09:14 GMT), the Dow futures contract had dipped marginally by 4 points or 0.01%, S&P 500 futures were lower by 7 points or 0.1%, and Nasdaq 100 futures fell by 37 points or 0.3%.All three of the main indices ended the prior session higher after data showed that job openings, a proxy for labor demand, in the U.S. dropped by more than anticipated to their lowest point in nearly two-and-a-half years in July. The rate of workers quitting their jobs also decreased to a 30-month low, suggesting that employees may be seeing fewer opportunities that would persuade them to switch roles.Meanwhile, a Conference Board consumer sentiment index reading of 106.1 missed estimates, pointing to a possible easing in the broader economy.The numbers helped to bolster expectations that the Federal Reserve, which has been keen to slow labor demand to help cool inflation, will elect to keep interest rates steady at their next policy meeting in September.2. Private payrolls loom amid wave of labor market dataMore detail will likely be plugged into the current picture of the labor market later today with the release of private payrolls data for August.The ADP National Employment report is projected to show that private employment rose by 195,000 during the month, down from a jump of 324,000 in July. The wave of job market data is due to roll on tomorrow when weekly claims for unemployment benefits are unveiled.The figures will add to the backdrop for this week’s main event on the economic calendar: the monthly nonfarm payrolls report. Economists predict that the U.S. economy added 170,000 jobs in August, a smaller increase compared to an uptick of 187,000 in the previous month.Taken together, the data are expected to aid efforts to forecast the Fed’s interest rate path. There is currently an 88% probability that the central bank will keep borrowing costs unchanged at a range of 5.25% to 5.50% next month, according to Investing.com’s Fed Rate Monitor Tool.On the earnings front, Jack Daniel’s whiskey owner Brown-Forman (NYSE:BFb), as well as tech firms Salesforce (NYSE:CRM) and Crowdstrike (NASDAQ:CRWD), are scheduled to report their latest quarterly reports on Wednesday.3. Nvidia’s record closeShares in Nvidia soared to their highest-ever closing price on Tuesday, bringing the chipmaking giant’s market capitalization up to $1.2 trillion.The California company has become the focal point of a recent surge in enthusiasm around the applications of generative artificial intelligence. Nvidia almost exclusively creates the chips that power the technology, giving it pole position in the race to take advantage of the AI boom.Shares, which have more than tripled in 2023, were given even more of a boost in the prior session after Nvidia announced a new partnership with Google. The agreement will give the tech titan’s clients more access to Nvidia’s powerful H100 graphics processing units.Nvidia has now accounted for just under a sixth of the S&P 500’s returns this year, according to Reuters, making it the standout performer in what has been a strong annual rally across megacap tech stocks.4. Bitcoin jumps after Grayscale appeals court winThe price of Bitcoin surged to a two-week high after a landmark decision by an appeals court in the U.S. set the stage for a spot bitcoin exchange-traded fund.On Tuesday, the court’s panel of judges ruled that the Securities and Exchange Commission was wrong to deny crypto asset manager Grayscale permission to convert its Bitcoin trust into an ETF that would track the price of the world’s largest cryptocurrency. The court said Grayscale proved that its proposed Bitcoin ETF was “materially similar” to a separate futures ETF that follows agreements to buy or sell Bitcoin at a pre-determined price. The SEC has approved the Bitcoin futures ETF.Bitcoin spiked after the move, and has risen by 5.54% to $27,407.5 over the past 24 hours as of 05:43 ET on Wednesday. Other major cap coins, including Ether, also climbed, while crypto exchange Coinbase (NASDAQ:COIN) closed nearly 15% higher on Tuesday.Both the cryptocurrency and asset management industries have long been attempting to create a spot Bitcoin ETF, arguing that it would grant investors exposure to Bitcoin without necessarily having to own the digital token. The SEC, however, has flagged that these types of ETFs could be subjected to manipulation.Several other parties have also applied for a spot bitcoin ETF this year, including Nasdaq Inc and BlackRock Inc (NYSE:BLK), the world’s biggest asset manager. A bulk of these filings proposed working with Coinbase to police bitcoin trading and prevent price manipulation.5. Crude rises following U.S. inventories drawOil prices rose on Wednesday, extending recent gains after industry data pointed to a hefty draw in U.S. crude stockpiles, adding to concerns about a hurricane in the Gulf of Mexico.By 05:16 ET, the U.S. crude futures traded 0.7% higher at $81.69 a barrel, while the Brent contract climbed 0.5% to $85.31. Both contracts rose over 1% on Tuesday.Data from the American Petroleum Institute, released late Tuesday, showed that crude stocks fell by over 11 million barrels last week, suggesting healthy demand ahead of the Labor Day holiday that usually marks peak summer demand.Additionally, Hurricane Idalia continues to head towards Florida, threatening production in the Gulf of Mexico. The region makes up about 15% of U.S. oil output and about 5% of natural gas production, according to data from the Energy Information Administration cited by Reuters. Oil group Chevron (NYSE:CVX) said it had evacuated some staff from three platforms, although it noted that output was continuing. Meanwhile, energy infrastructure firm Kinder Morgan (NYSE:KMI) said it planned to shut a petroleum pipeline. More

Investors are betting that the European Central Bank is increasingly likely to raise interest rates next month after Spanish inflation hit a three-month high in August while prices rose faster than expected in Germany’s most populous region.The Spanish statistics office said the harmonised index of consumer prices rose at an annual rate of 2.4 per cent in August, which was up from 2.1 per cent in June but slightly below economists’ forecasts polled by Reuters.However, consumer prices in North Rhine-Westphalia rose 5.9 per cent in the year to August, an acceleration from 5.8 per cent in July, the statistics office of the German federal state said on Wednesday using the national measure of inflation. This sparked investor doubts over whether the harmonised index of consumer prices for the whole of Germany would be higher than the 6.2 per cent expected for August when that data comes out later on Wednesday, which would be down from 6.5 per cent in July. “Overall, these data are slightly on the hawkish side, indicating that risks are now tilted to the upside for this week’s eurozone inflation data,” said Claus Vistesen, an economist at consultants Pantheon Macroeconomics.In response, eurozone sovereign bonds sold off, sending the yield on Germany’s rate-sensitive two-year bond 8.3 basis points higher close to a one-month high of 3.1 per cent. Bond yields rise as their prices fall.The sell-off reversed gains from late on Tuesday when weaker than expected US jobs data caused bond prices to rally as investors saw lower odds of another rate rise by the Federal Reserve.Inflation in the overall eurozone is expected to fall from 5.3 per cent in July to 5.1 per cent when August data is released on Thursday. Policymakers at the ECB will also be watching the core rate of inflation, excluding energy and food prices, which is expected to fall from 5.5 per cent to 5.3 per cent. In Spain, the national statistics office gave few details except to say higher energy inflation was a key factor in the rise of headline price growth. The country’s underlying rate of inflation, stripping out energy and fresh food prices, dipped to 6.1 per cent. Jeroen Blokland, head of research at investment adviser True Insights, wrote on social media platform X that the smaller than expected fall in Spanish core inflation “will strengthen the inflation hawks at the ECB to push for another rate hike, risking a deeper recession later”.The percentage of eurozone companies expecting to raise their prices increased in most sectors for the first time since last autumn, according to a monthly European Commission survey. Consumers’ price expectations over the next 12 months also rose by the most in more than a year, it found.Adding to the gloomy outlook, the EU’s economic sentiment indicator dropped more than expected to its lowest level since August 2020. Eurozone businesses’ employment expectations also fell to their lowest level since April 2021, suggesting the region’s strong labour market could be about to weaken.The more dovish members of the ECB governing council say inflation has already halved and more rate rises risk causing an unnecessarily painful recession. But the hawks argue price growth is too far above the bank’s 2 per cent target. At its last policy meeting in July, the central bank left the door open for the first time in more than a year for a pause in its policy tightening at its next meeting on September 14. It has already increased its benchmark deposit rate nine consecutive times from minus 0.5 per cent to 3.75 per cent.Economists say next month’s decision is a “coin toss” that could depend on how much core eurozone inflation falls in August. More

BEIJING (Reuters) – The European Union Chamber of Commerce in China said on Wednesday that it would not use the term “uninvestable” to describe China, in response to a comment from the United States.U.S. Commerce Secretary Gina Raimondo said late Tuesday American firms had increasingly used the term to describe China, prompting Beijing to defend its business practices and approach to foreign investment.”‘Uninvestable’ is not a term we would use to describe China,” Jens Eskelund, president of the EU chamber, said in an emailed response to questions from Reuters on Raimondo’s remarks.He added, however, that China was “under-invested” in terms of the amount of foreign direct investment it had been able to attract from Europe given the size of its economy, and noted that EU investment into China had been decreasing in recent years. He also raised similar concerns to Raimondo about China’s business environment, including ambiguous regulations and security issues.”China can do much to turn this around,” Eskelund said. “But it would take clear, concrete and specific action in terms of removing some of the concerns presently weighing on companies when making investment decisions.”He cited a recent business survey from June which found almost two-thirds of its members indicated that they would consider expanding their presence in China should market access improve. More

Good morning. Ethan here; Rob’s away this week. Stocks rose and yields fell yesterday after some jobs data that smelled of soft landing. The quits rate is back at pre-pandemic levels and job openings just keep falling. Goldman Sachs thinks the labour market is rebalancing fast. Disagree? Email me: [email protected] on China and balance sheet recessionsLast week, I wrote about the case that a balance sheet recession is not the best way to understand what ails China. Classic cases of balance sheet recession, as first articulated by the economist Richard Koo, centre on falling asset prices forcing overleveraged households and businesses to cut debt all at once, crushing demand. But in China, asset prices are not widely falling. Home sales volumes have collapsed, but prices have only turned down some. And measures of aggregate indebtedness don’t suggest broad-based deleveraging. Domestic debt as a share of output is close to flat:

Rather, China’s problems look more like a consumer confidence deficit plus a meltdown specific to property investment. Consumers’ precarious zero-Covid experience, including its haphazard end, has likely left scars, worsening a pre-existing property downturn. One bit of data I cited to make this argument was a rise in consumers’ precautionary savings. But one esteemed reader thought this missed the point. The FT’s Martin Wolf writes:Higher ex ante precautionary savings are an extremely plausible element in a balance sheet recession. The essence of such a recession is that economic decision makers are simultaneously poorer and more illiquid than they expected. Higher precautionary savings (due to weaker confidence in the future) are an inevitable consequence, though there are others, as well (weaker investment, for example).In other words, maybe precautionary savings are just part of a larger balance sheet recession picture, rather than evidence against it. One way to push back here is to note that weaker investment has not materialised, other than in the property sector. In Japan’s 1990s balance sheet recession, many companies were overextended amid a broad-based asset bubble; in China, it is largely construction developers that are stretched. And unlike in the US housing crash, China’s real estate bubble is narrowly concentrated in new housing construction, says Adam Wolfe of Absolute Strategy Research. China “never saw credit being used to inflate the value of existing homes,” he points out.Because the problem is so specific to property development, overall fixed-asset investment has held up, as this chart from Gavekal Dragonomics shows:

I put this to Martin, who offered a useful synthesis in reply:These are good points. Nonetheless, a balance sheet recession in the property sector alone (it was a huge part of the Japanese balance-sheet recession, as in the Spanish and Irish) will surely have a large effect on the economy. The [Gavekal chart above] shows significant falls in real estate investment, which has been a powerful motor of the Chinese economy. Also, in the Chinese context, I would suggest that a move from massive leveraging to flat debt is clearly contractionary. So, I would argue that this is a balance-sheet recession, but so far a weak one or one in very early stages. That is, it is a recession triggered by the end of debt accumulation.The key point is that an end to China’s leveraging up is enough to badly hurt demand. However, absent clearer evidence of deleveraging, it’s hard to see how China fits the bill of balance sheet recession in Richard’s Koo original sense. Martin adds:My perspective is, admittedly, not really Koo’s, which focuses on asset prices and debt (that is stock adjustments). I am more interested in sectoral balances (that is flow adjustments, which bear directly on aggregate demand). This distinction is important. Does China confront a problem of stocks, or of flows? If what the country faces is rapidly deteriorating stocks of debt and assets, supporting demand is hard. Fiscal policy can help, but ultimately a lot of private sector actors will need to mend their balance sheets. It can take years. This is the classic balance sheet recession story.But if what China faces instead is dwindling flows of new debt, the picture is different. Households usually save more than they invest, whereas corporations invest more than they save. In China, cautious households are now saving even more and investing less (most household investment is in property). Unless those higher net savings are redirected into investment through borrowing, aggregate demand will fall. But who can borrow in China right now? Developers cannot access credit. The rest of corporate China is in OK shape, but not so much as to begin a fresh borrowing binge. The only plausible borrower is the state, which is reluctant. This is how a drying up of new debt flows can squash demand.(Careful readers will point out here that, in theory, an excess of savings could also show up as a bigger current account surplus. This is true, but seems unlikely to close the gap.)Happily, traditional Keynesian stimulus, particularly direct transfers to households, can solve this problem of flows, offsetting household savings with government borrowing. Unhappily, Chinese authorities appear uninterested in the ready-made fix. As the Wall Street Journal reported over the weekend:But top leader Xi Jinping has deep-rooted philosophical objections to Western-style consumption-driven growth, people familiar with decision-making in Beijing say. Xi sees such growth as wasteful and at odds with his goal of making China a world-leading industrial and technological powerhouse, they say.Xi believes Beijing should stick to fiscal discipline, especially given China’s deep debt. That makes stimulus or welfare policies akin to those in the US and Europe less likely, the people said…Chinese officials told their counterparts at multinational institutions that the many hardships Xi survived during the Cultural Revolution — when he lived in a cave and dug ditches — helped shape his view that austerity breeds prosperity, the people said.Whether austerity breeds prosperity may be learned the hard way in China.One good readAlexandra Scaggs’s Grayscale rant. More